May 25, 2018 – Not much movement in market in general this week. The S&P 500 index was up a modest 0.31%. Most of the market movement was in mid and small cap stocks (i.e. non-S&P 500). Note the broad NASDAQ Composite Index remained bogged down near the 7421 level. We’ve talked about the significance of that level last week as being the last point were “buying came into the market”. What is needed to move higher is more buying, but it looks like investors are taking a ‘wait and see’ approach.

Geo-political issues continue to cause caution. Q: Why invest new money when things are bouncing around so much? Good point. Oil got hit hard late last week with comments coming out of Saudi Aribia. Note how far Oil fell in the table below (red circle); was in the top 5 last week. That may be a short term reaction, but we’ll have to wait and see next week. Indicators remain bullish / positive, but it sure would be nice to see a decisive break above 7421 (blue line on the chart). Not much else to say right now so I’ll close with a look at sector strength in the US stock market.

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May 18, 2018 – The market (as measured by the broad NASDAQ Composite Index) met resistance near the 7421 level (blue line). All week long it hovered around that level and just couldn’t break through it decisively. Remember that this level is determined as a (Wyckoff) “Significant Bar” on a weekly scale; that’s the weekly high where selling last appeared. Since the market “balked” the last time it was there it is significant to note and monitor.

This is not a bad omen, it just means that in an average market one would expect the price action to slow before breaking one way or the other. The short term indicators remain positive from Market Sentiment to the Money & Volume Flows. In order for the market to move higher we’d like to see a Sign of Strength (SOS) which would be a daily bar with a wide range, closing near the top on increasing volume. That would indicate buyers stepping in. Attention is given to the fact that as we approach summer it is a typical slow / weak season. I don’t subscribe to the phrase “Sell in May and Go Away”, but summer is usually slow. We could just bounce around in this range for a few months; that would not be surprising.

Looking at the market health from a different perspective, we note the number (i.e. percent of) stocks in the S&P 1500 Index that have strong price action and those in an Accumulation, Distribution or just Neutral phase.

Price Strength –In Accumulation / Distribution –Sectors that are doing well include Energy (Oil & Services), US Small Cap Index, China, Internet and Basic Materials. Latin America is one of the weakest areas, That’s about it for now. Have a good week. ………… Tom ……….

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May 11, 2018 – A quick look at the chart below confirms an upward breakout. Sentiment, Money Flow, Volume Flow and Price Strength are all positive. But more important are the closes above previous Support levels. But . . one more hoop to jump through is the 7405 level, just above Fridays bar (light green line).

The 7405 level was the last level were Buying Stopped on a weekly basis. That level was generated back in late March. With that small caveat I’m “comfortably long”; that’s “invested but not aggressively so”. The thing I’m looking for is where the market leadership is located. During the post election run upwards Technology, Semiconductors and Consumer Goods were the darlings. Tech and Oil have returned to leadership but I sense some hesitation. Banks, Financials and Small Cap stocks in general are showing signs of strength and that would help maintain confidence in any continued upward movement.

Earnings have been good, but with the massive corporate tax cut they should be. For now the market is looking way past this reporting period. A run in Basic Materials would signal a longer term bullish look for the world economies. For now here’s how sectors are looking in the short term:

Looking for leaders in the “green sectors” at the moment. Also of note is the recent strength in China stocks. Have a good week. …. Tom ….

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May 4, 2018 – The markets were generally lower this week until Friday; that’s when the jobs report came out. Everyone found what they wanted in it. Unemployment dropped to 3.9% (low) and wage growth was minimal (low inflation pressures). So Friday was a recovery day.

I had a small hedge in place to protect our portfolios in this environment, but took them off (according to plan) on Friday. That market model is now in 100% cash waiting for confirmation of a trend . . . in either direction. I’ve placed Wyckoff key bar labels on the chart to signify a possible structure scenario. Of note is the low on Thursday as a potential LPS (last point of supply). Such a structure is Bullish and (theoretically) the market should take off higher very soon. What does concern me is the rather low volume on Friday, indicating a lack of sellers and mostly low volume buyers that pushed prices. Covering shorts it appears to me.

Of note also is the close very near the 7205 level (red line). That was our resistance level short term. I need to see a break above 7332 to feel more comfortable though. Sentiment is positive but Money and Volume Flows are pretty neutral right now. Price Strength is neutral to bearish as well. Let’s see how the stocks in the broad S&P 1500 Index are fairing:

% of Stocks, Price Strength –

% of Stocks in Accumulation / Distribution –

Both pie charts are fairly even and that’s usually a healthy sign. I’m still looking at more defensive sectors like Rising Dollar, Japan, Oil and Utilities now, but that could change quickly next week IF the market goes higher. That’s it for this week. The coming week should provide us some clues for the next move, but uncertainty remains with earnings and geo-political issues in play. ……….. Tom ………..